CRA INTERNATIONAL, INC. 10-K

Item 9A. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. This is done in order to ensure that information we are required to disclose in the reports that are filed or submitted under the Securities Exchange Act of 1934 ("the Exchange Act"), as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 30, 2023. 32 Table of Contents (b) Management's Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Chief Financial Officer, we assessed the effectiveness of our internal control over financial reporting as of the end of the period covered by this report based on the framework in "Internal Control—Integrated Framework (2013)" issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our President and Chief Executive Officer and our Chief Financial Officer concluded that our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles as of December 30, 2023. Our independent registered public accounting firm, Grant Thornton LLP, has issued an audit report on their assessment of our internal control over financial reporting. The audit report is included herein. (c) Evaluation of Changes in Internal Control over Financial Reporting Our evaluation of our internal control over financial reporting discussed in Section (b) did not identify any changes in our internal control over financial reporting during the fourth quarter of fiscal 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information During the fourth quarter of fiscal 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K) except as described in the table below. Name and Title Date of Adoption of Rule 10b5-1 Trading Plan Scheduled Expiration Date of Rule 10b5-1 Trading Plan Aggregate Number of Securities to Be Purchased or Sold Paul A. Maleh , President and Chief Executive Officer December 4, 2023 March 10, 2025 37,500 Daniel K. Mahoney , Chief Financial Officer, Executive Vice President and Treasurer November 28, 2023 August 8, 2024 3,000 Jonathan D. Yellin , Executive Vice President and General Counsel November 28, 2023 November 7, 2024 5,000 Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections Not Applicable. 33 Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Shareholders CRA International, Inc. Opinion on internal control over financial reporting We have audited the internal control over financial reporting of CRA International, Inc. (a Massachusetts corporation) and subsidiaries (the “Company”) as of December 30, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 30, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 30, 2023, and our report dated February 29, 2024 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Boston, Massachusetts February 29, 2024 34 Table of Contents PART III We have omitted the information required in Part III of this annual report because we intend to include that information in our definitive proxy statement for the 2024 annual meeting of shareholders, which we expect to file within 120 days (or such greater number as permitted by SEC rules) after the end of fiscal 2023. We incorporate that information in this annual report by reference to the proxy statement to be filed in connection with the 2024 annual meeting of our shareholders, which we will refer to herein as our "2024 annual proxy statement." Item 10. Directors, Executive Officers and Corporate Governance We incorporate the information required by this item by reference to the sections captioned "Corporate Governance" (specifically, its subsections captioned "Overview," "Executive officers and directors" and "Audit committee") and "Delinquent Section 16(a) Reports" in our 2024 annual proxy statement. Item 11. Executive Compensation We incorporate the information required by this item by reference to the section captioned "Compensation of Directors and Executive Officers" in our 2024 annual proxy statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters We incorporate the information required by this item by reference to the sections captioned "Security Ownership of Certain Beneficial Owners and Management" and "Equity Compensation Plans" in our 2024 annual proxy statement. Item 13. Certain Relationships and Related Transactions and Director Independence We incorporate the information required by this item by reference to the sections captioned "Transactions with Related Parties" and "Corporate Governance" (specifically, its subsection captioned "Overview") in our 2024 annual proxy statement. Item 14. Principal Accountant Fees and Services We incorporate the information required by this item by reference to the section captioned "Principal Accountant Fees and Services" in our 2024 annual proxy statement. 35 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (a) Financial Statements, Schedules, and Exhibits. We have listed our consolidated financial statements filed as part of this annual report in the index to consolidated financial statements on page FS-1. We have listed the exhibits filed as part of this annual report in the accompanying exhibit index, which follows the signature page to this annual report. (b) Exhibits. We have listed the exhibits filed as part of this annual report in the accompanying exhibit index, which follows the signature page to this annual report. (c) Financial Statement Schedules. We have omitted all financial statement schedules because they are not applicable or not required or because we have included the necessary information in our consolidated financial statements or related notes. 36 Table of Contents EXHIBIT INDEX Incorporated by Reference Exhibit No. Description Filed with this Form 10-K Form Filing Date Exhibit No. 3.1 Amended and Restated Articles of Organization, as amended by the Articles of Amendment to our Articles of Organization filed on May 6,2005. 10-K February 27, 2020 3.1 3.2 Amended and Restated By-Laws, as amended. 8-K January 31, 2011 3.2 4.1 Specimen certificate for common stock. S-8 April 21, 2006 4.4 4.2 Description of Capital Stock 10-K February 27, 2020 4.2 10.1* 1998 Employee Stock Purchase Plan. S-1/A April 3, 1998 10.2 10.2* Amended and Restated 2006 Equity Incentive Plan, as amended. 8-K July 17, 2023 10.1 10.3* Form of Restricted Stock Agreement for Non-Employee Director Award Pursuant to Section 6.9 of the 2006 Equity Incentive Plan. 8-K April 27, 2006 10.2 10.4* Form of Restricted Stock Agreement for Non-Employee Director Award Pursuant to Section 6.9 of the 2006 Equity Incentive Plan with Company Right of First Refusal . 10-K February 12, 2009 10.9 10.5* Form of Restricted Stock Agreement for Non-Employee Director Award Pursuant to Section 6.9 of the 2006 Equity Incentive Plan, as amended. 10-K March 2, 2012 10.11 10.6* Form of Restricted Stock Agreement for Non-Employee Director Award Pursuant to Section 6.9 of the 2006 Equity Incentive Plan, as amended. 10-K March 15, 2017 10.9 10.7* Form of Restricted Stock Agreement for Non-Employee Director Award Pursuant to Section 6.9 of the 2006 Equity Incentive Plan, as amended. 10-K March 12, 2018 10.7 10.8* Form of Restricted Stock Agreement for Non-Employee Director Award Pursuant to Section 6.9 of the 2006 Equity Incentive Plan, as amended. 10-Q August 2, 2018 10.3 10.9* Form of Restricted Stock Agreement for Employee or Independent Contractor Awards under the 2006 Equity Incentive Plan. 8-K April 27, 2006 10.3 10.10* Form of Restricted Stock Agreement for Employee or Independent Contractor Awards under the 2006 Equity Incentive Plan with Company Right of First Refusal. 10-K February 12, 2009 10.11 10.11* Form of Restricted Stock Agreement for Employee or Independent Contractor Awards under the 2006 Equity Incentive Plan with Company, as amended. 10-K March 2, 2012 10.14 10.12* Form of Restricted Stock Agreement for Employee or Independent Contractor Award under the 2006 Equity Incentive Plan, as amended. 10-Q August 2, 2018 10.4 10.13* Form of Nonqualified Stock Option under the 2006 Equity Incentive Plan. 10-K February 8, 2007 10.10 10.14* Form of Nonqualified Stock Option under the 2006 Equity Incentive Plan with Stock Ownership Guidelines. 10-K March 2, 2012 10.16 10.15* Form of Nonqualified Stock Option under the 2006 Equity Incentive Plan with Ownership Guidelines. 10-K March 15, 2017 10.12 10.16* Form of Nonqualified Stock Option under the 2006 Equity Incentive Plan with Ownership Guidelines. 10-K March 12, 2018 10.14 10.17* Form of Restricted Stock Unit Award Agreement under the 2006 Equity Incentive Plan. 10-K January 29, 2010 10.14 10.18* Form of Restricted Stock Unit Award Agreement under the 2006 Equity Incentive Plan with Stock Ownership Guidelines. 10-K March 2, 2012 10.18 10.19* Form of Restricted Stock Unit Award Agreement under the 2006 Equity Incentive Plan with Ownership Guidelines. 10-K March 15, 2017 10.15 10.20* Form of Restricted Stock Unit Award Agreement under the 2006 Equity Incentive Plan with Ownership Guidelines. 10-K March 12, 2018 10.18 10.21* Form of Restricted Stock Unit Award Agreement for Performance under the 2006 Equity Incentive Plan. 10-K January 29, 2010 10.15 10.22* Form of Restricted Stock Unit Award Agreement for Performance under the 2006 Equity Incentive Plan with Stock Ownership Guidelines. 10-K March 2, 2012 10.20 37 Table of Contents Incorporated by Reference Exhibit No. Description Filed with this Form 10-K Form Filing Date Exhibit No. 10.23* Form of Restricted Stock Unit Award Agreement for Performance under the 2006 Equity Incentive Plan with Ownership Guidelines. 10-K March 15, 2017 10.18 10.24* Form of Restricted Stock Unit Award Agreement for Performance under the 2006 Equity Incentive Plan with Ownership Guidelines. 10-K March 12, 2018 10.22 10.25* CRA International, Inc. Cash Incentive Plan, as amended. DEF 14A April 28, 2017 Annex B 10.26* Form of Service Cash Awards Agreement under the Cash Incentive Plan with Ownership Guidelines. 8-K December 12, 2016 10.2 10.27* Form of Performance Cash Awards Agreement under the Cash Incentive Plan with Ownership Guidelines. 8-K December 12, 2016 10.3 10.28* Summary of Director Compensation. 10-K February 27, 2020 10.28 10.29 Lease dated February 24, 2014 by and between CRA International, Inc. and BP Hancock LLC 8-K February 27, 2014 10.1 10.30 First Amendment to Lease dated as of February 24, 2015 by and between CRA International, Inc. and BP Hancock LLC 8-K March 2, 2015 10.1 10.31 Second Amendment to Lease dated as of August 16, 2017 by and between CRA International, Inc. and BP Hancock LLC. 10-Q August 2, 2018 10.1 10.32 Third Amendment to Lease dated as of June 27, 2018 by and between CRA International, Inc. and BP Hancock LLC. 10-Q August 2, 2018 10.2 10.33 Office Lease dated as of November 29, 1999 between CRA and 1201 F Street, L.L.C., as amended. 10-K February 23, 2001 10.9 10.34 Addenda Nos. 3 and 4 to Office Lease dated as of November 29, 1999 between CRA and 1201 F Street, L.L.C. (or its successor in interest, 1201 F Street, L.P.), as amended. 10-K March 17, 2015 10.35 10.35 Addendum No. 5 to Office Lease dated as of November 29, 1999 between CRA and 1201 F Street, L.P., as amended. 8-K December 30, 2014 10.1 10.36 Amended and Restated Addendum No. 5 to Office Lease dated as of November 29, 1999 between CRA and 1201 F Street L.P., as amended. 10-K March 4, 2016 10.28 10.37 Addendum No. 6 to Lease dated July 11, 2016 by and between CRA International, Inc. and 1201 F Street, L.P. 10-Q October 31, 2017 10.3 10.38 Agreement for Leases dated May 20, 2016 by and among Mitsubishi Estate London Limited, CRA International (UK) Limited and CRA International, Inc. 8-K May 25, 2016 10.1 10.39 Lease relating to Unit 2, Part Ground Floor, 8 Finsbury Circus, London EC2 dated May 20, 2016 by and among Mitsubishi Estate London Limited, CRA International (UK) Limited and CRA International, Inc. 8-K May 25, 2016 10.2 10.40 Lease relating to Fourth Floor, 8 Finsbury Circus, London EC2 dated May 20, 2016 by and among Mitsubishi Estate London Limited, CRA International (UK) Limited and CRA International, Inc. 8-K May 25, 2016 10.3 10.41 License to Carry Out Works relating to Unit 2, Part Ground Floor, 8 Finsbury Circus, London EC2 dated May 20, 2016 by and among Mitsubishi Estate London Limited, CRA International (UK) Limited and CRA International, Inc. 8-K May 25, 2016 10.4 10.42 Licence to Carry Out Works relating to Fourth Floor, 8 Finsbury Circus, London EC2 dated May 20, 2016 by and among Mitsubishi Estate London Limited, CRA International (UK) Limited and CRA International, Inc. 8-K May 25, 2016 10.5 10.43 Side Deed dated May 20, 2016 by and among Mitsubishi Estate London Limited, CRA International (UK) Limited and CRA International, Inc. 8-K May 25, 2016 10.6 10.44 Agreement for Lease dated November 21, 2017 by and among Mitsubishi Estate London Limited, CRA International (UK) Limited and CRA International, Inc. 8-K November 27, 2017 10.1 10.45 Lease dated February 12, 2018 by and among Mitsubishi Estate London Limited, CRA International (UK) Limited and CRA International, Inc. 10-Q May 8, 2018 10.2 38 Table of Contents Incorporated by Reference Exhibit No. Description Filed with this Form 10-K Form Filing Date Exhibit No. 10.46 Deed of Variation of a Lease of Fourth Floor, 8 Finsbury Circus, London EC2 dated October 17, 2018 between Mitsubishi Estate London Limited, CRA International (UK) Limited and CRA International, Inc. 10-K February 28, 2019 10.46 10.47 Deed of Variation of a Lease of Part Third Floor, 8 Finsbury Circus, London EC2 dated October 17, 2018 between Mitsubishi Estate London Limited, CRA International (UK) Limited and CRA International, Inc. 10-K February 28, 2019 10.47 10.48 Licence to Carry Out Works relating to Part Third Floor and Fourth Floor, 8 Finsbury Circus, London EC2 dated October 17, 2018 between Mitsubishi Estate London Limited, CRA International (UK) Limited and CRA International, Inc. 10-K February 28, 2019 10.48 10.49 Lease dated July 15, 2015 by and between CRA International, Inc. and 1411 IC-SIC Property LLC. 8-K July 21, 2015 10.1 10.50 First Amendment to Lease dated April 21, 2017 by and between CRA International, Inc. and 1411 IC-SIC Property LLC 8-K May 5, 2017 10.1 10.51 Second Amendment to Lease dated July 28, 2017 by and between CRA International, Inc. and 1411 IC-SIC Property LLC. 10-Q May 8, 2018 10.1 10.52 Lease dated as of February 14, 2008 by and between Teachers Insurance and Annuity Association of America, as landlord, and CRA International, Inc., as tenant, and the First Amendment to Lease dated as of May 8, 2017 by and among John Hancock Life Insurance Company (U.S.A.), as landlord and successor-in-interest to Teachers Insurance and Annuity Association of America, and CRA International, Inc., as tenant. 10-Q May 11, 2017 10.2 10.53 Office Lease dated April 2, 2013 by and between C1 Consulting Limited Liability Company and 221 Main Property Owner LLC, as amended by First Amendment to Lease dated July 21, 2017 by and between CRA International, Inc. (as successor to C1 Consulting Limited Liability Company) and Columbia REIT—221 Main, LLC (as successor to 221 Main Property Owner LLC) 10-Q October 31, 2017 10.2 10.54 Form of consulting agreement with outside experts. S-1/A April 3, 1998 10.8 10.55 Office Lease dated June 18, 2019 between 601 City Center LLC and CRA International, LLC 8-K June 24, 2019 10.1 10.56 Third Amendment to Lease dated September 9, 2019 by and between CRA International, Inc. and 1411 IC-SIC Property LLC 10-Q October 31, 2019 10.1 10.57* Offer Letter between CRA International, Inc. and Daniel Mahoney effective March 17, 2020. 8-K March 20, 2020 10.1 10.58* Severance Agreement between CRA International, Inc. and Paul A. Maleh dated March 17, 2020. 8-K March 20, 2020 10.2 10.59* Severance Agreement between CRA International, Inc. and Chad M. Holmes dated March 17, 2020. 8-K March 20, 2020 10.3 10.60* Severance Agreement between CRA International, Inc. and Jonathan Yellin dated March 17, 2020. 8-K March 20, 2020 10.4 10.61* Severance Agreement between CRA International, Inc. and Daniel Mahoney dated March 17, 2020. 8-K March 20, 2020 10.5 10.62 Third Amendment to Lease dated August 11, 2021 by and between CRA International, Inc., 601W South Wacker LLC and 601 Sunset Wacker LLC. 10-Q November 4, 2021 10.1 10.63 Credit Agreement, dated as of August 19, 2022, by and among CRA International, Inc., CRA International (UK) Limited, CRA International (Netherlands) B.V., and CRA International Limited, as the Borrowers, Bank of America, N.A., as Administrative Agent, Swingline Lender and L/C Issuer, the other L/C Issuers party thereto and the other Lenders party thereto 8-K August 23, 2022 10.1 21.1 Subsidiaries. X 23.1 Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm. X 31.1 Rule 13a-14(a)/15d-14(a) certification of principal executive officer. X 39 Table of Contents Incorporated by Reference Exhibit No. Description Filed with this Form 10-K Form Filing Date Exhibit No. 31.2 Rule 13a-14(a)/15d-14(a) certification of principal financial officer. X 32.1 Section 1350 certification of principal executive officer. X 32.2 Section 1350 certification of principal financial officer. X 97.1 Policy for the Recovery of Erroneously Awarded Compensation X 101 The following financial statements from CRA International, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 30, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language), as follows: (i) Consolidated Statements of Operations for the fiscal years ended December 30, 2023, December 31, 2022, and January 1, 2022, (ii) Consolidated Statements of Comprehensive Income for the fiscal years ended December 30, 2023, December 31, 2022, and January 1, 2022, (iii) Consolidated Balance Sheets at December 30, 2023 and December 31, 2022, (iv) Consolidated Statements of Cash Flows for the fiscal years ended December 30, 2023, December 31, 2022, and January 1, 2022, (v) Consolidated Statements of Shareholders' Equity for the fiscal years ended December 30, 2023, December 31, 2022, and January 1, 2022 and (vi) Notes to Consolidated Financial Statements. X 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Management contract or compensatory plan, contract or arrangement. Item 16. Form 10-K Summary None. 40 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CRA INTERNATIONAL, INC. By: /s/ PAUL A. MALEH Paul A. Maleh President, Chief Executive Officer and Director Date: February 29, 2024 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. Signature Title Date /s/ PAUL A. MALEH President, Chief Executive Officer, and Chairman of the Board (principal executive officer) February 29, 2024 Paul A. Maleh /s/ DANIEL K. MAHONEY Chief Financial Officer, Executive Vice President, and Treasurer (principal financial officer and principal accounting officer) February 29, 2024 Daniel K. Mahoney /s/ THOMAS A. AVERY Director February 29, 2024 Thomas A. Avery /s/ RICHARD D. BOOTH Director February 29, 2024 Richard D. Booth /s/ WILLIAM F. CONCANNON Director February 29, 2024 William F. Concannon /s/ CHRISTINE R. DETRICK Director February 29, 2024 Christine R. Detrick /s/ ROBERT W. HOLTHAUSEN Director February 29, 2024 Robert W. Holthausen /s/ KAREN C. KEENAN Director February 29, 2024 Karen C. Keenan /s/ ALVA H. TAYLOR Director February 29, 2024 Alva H. Taylor /s/ HEATHER E. TOOKES Director February 29, 2024 Heather E. Tookes 41 Table of Contents CRA INTERNATIONAL, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID 248 ) FS- 2 Consolidated Statements of Operations FS- 4 Consolidated Statements of Comprehensive Income FS- 5 Consolidated Balance Sheets FS- 6 Consolidated Statements of Cash Flows FS- 7 Consolidated Statements of Shareholders' Equity FS- 8 Notes to Consolidated Financial Statements FS- 9 FS-1 Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Shareholders CRA International, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of CRA International, Inc. (a Massachusetts corporation) and subsidiaries (the "Company") as of December 30, 2023 and December 31, 2022, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 30, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 30, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 30, 2023, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 30, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 29, 2024 expressed an unqualified opinion. Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Fixed-Price Revenue Recognition – Estimates of total costs to complete a performance obligation for performance obligations that are partially satisfied as of the balance sheet date As described further in Notes 1 and 2 to the consolidated financial statements, the Company recognizes revenue from fixed-price arrangements using the ratio of costs incurred to total estimated costs for completing a performance obligation. We identified the Company’s estimates of total costs to complete a performance obligation for performance obligations in a fixed-price arrangement that are partially satisfied at the balance sheet date as a critical audit matter. The principal considerations for our determination that the Company’s estimates of total costs to complete a performance obligation for performance obligations in a fixed-price arrangement that are partially satisfied at the balance sheet date is a critical audit matter are the significant management judgement in estimating forecasted direct labor, subcontract labor and other direct costs remaining to complete a performance obligation and to determine the related revenue recognized. Significant management estimates are subject to estimation uncertainty and require significant auditor subjectivity in evaluating the results of our procedures and the reasonableness of those estimates. FS-2 Table of Contents Our audit procedures related to the estimates of total costs to complete a performance obligation for performance obligations in a fixed-price arrangement that are partially satisfied at the balance sheet date included the following, among others. • We tested the design and operating effectiveness of internal controls relating to management’s estimates of total costs to complete a performance obligation in a fixed-price arrangement for partially completed performance obligations as of the balance sheet date. • We evaluated management’s historical ability to estimate total costs to complete a performance obligation. • For a sample of fixed-price arrangements, that had partially completed performance obligations as of the balance sheet date, we obtained subsequent actual costs incurred and subsequent estimates of total costs to complete and compared to the Company's estimate. /s/ GRANT THORNTON LLP We have served as the Company's auditor since 2020. Boston, Massachusetts February 29, 2024 FS-3 Table of Contents CRA INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended Year Ended Year Ended December 30, 2023 (52 weeks) December 31, 2022 (52 weeks) January 1, 2022 (52 weeks) (in thousands, except per share data) Revenues $ 623,976 $ 590,901 $ 565,933 Costs of services (exclusive of depreciation and amortization) 439,751 410,081 400,054 Selling, general and administrative expenses 115,116 110,087 97,372 Depreciation and amortization 11,564 11,996 12,768 Income from operations 57,545 58,737 55,739 Interest expense, net ( 3,812 ) ( 1,826 ) ( 970 ) Foreign currency gains (losses), net ( 1,445 ) 1,889 ( 494 ) Income before provision for income taxes 52,288 58,800 54,275 Provision for income taxes 13,807 15,181 12,596 Net income $ 38,481 $ 43,619 $ 41,679 Net income per share: Basic $ 5.48 $ 6.02 $ 5.59 Diluted $ 5.39 $ 5.91 $ 5.45 Weighted average number of shares outstanding: Basic 7,008 7,218 7,423 Diluted 7,118 7,355 7,621 See accompanying notes to the consolidated financial statements. FS-4 Table of Contents CRA INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended Year Ended Year Ended December 30, 2023 (52 weeks) December 31, 2022 (52 weeks) January 1, 2022 (52 weeks) (in thousands) Net income $ 38,481 $ 43,619 $ 41,679 Other comprehensive income (loss) Foreign currency translation adjustments, net of tax 2,799 ( 5,031 ) ( 1,467 ) Comprehensive income $ 41,280 $ 38,588 $ 40,212 See accompanying notes to the consolidated financial statements. FS-5 Table of Contents CRA INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS December 30, 2023 December 31, 2022 (in thousands, except share data) ASSETS Current assets: Cash and cash equivalents $ 45,586 $ 31,447 Accounts receivable, net of allowances of $ 4,335 and $ 2,640 , respectively 142,729 143,644 Unbilled services, net of allowances of $ 1,629 and $ 1,120 , respectively 56,827 51,343 Prepaid expenses and other current assets 11,575 12,760 Forgivable loans 8,759 9,666 Total current assets 265,476 248,860 Property and equipment, net 38,176 45,582 Goodwill 93,989 92,922 Intangible assets, net 7,196 8,588 Right-of-use assets 86,887 96,725 Deferred income taxes 13,885 9,163 Forgivable loans, net of current portion 45,182 46,790 Other assets 2,420 2,287 Total assets $ 553,211 $ 550,917 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 28,701 $ 27,584 Accrued expenses 171,040 155,864 Deferred revenue and other liabilities 12,289 12,016 Current portion of lease liabilities 16,475 15,972 Current portion of deferred compensation 7,582 5,689 Total current liabilities 236,087 217,125 Non-current liabilities: Deferred compensation and other non-current liabilities 11,681 15,677 Non-current portion of lease liabilities 92,280 106,008 Deferred income taxes 1,062 953 Total non-current liabilities 105,023 122,638 Commitments and contingencies (Note 17) Shareholders’ equity: Preferred stock, no par value; 1,000,000 shares authorized; none issued and outstanding — — Common stock, no par value; 25,000,000 shares authorized; 6,934,265 and 7,149,884 shares issued and outstanding, respectively — 1,743 Retained earnings 224,283 224,392 Accumulated other comprehensive loss ( 12,182 ) ( 14,981 ) Total shareholders’ equity 212,101 211,154 Total liabilities and shareholders’ equity $ 553,211 $ 550,917 See accompanying notes to the consolidated financial statements. FS-6 Table of Contents CRA INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended Year Ended Year Ended December 30, 2023 (52 weeks) December 31, 2022 (52 weeks) January 1, 2022 (52 weeks) (in thousands) OPERATING ACTIVITIES: Net income $ 38,481 $ 43,619 $ 41,679 Adjustments to reconcile net income to net cash provided by operating activities, net of effect of acquired businesses: Depreciation and amortization 11,564 11,996 12,768 Right-of-use asset amortization 14,273 13,755 13,011 Deferred income taxes ( 4,634 ) 189 446 Share-based compensation expense 4,400 4,773 4,086 Bad debt expense (recovery) 533 ( 345 ) 27 Unrealized foreign currency remeasurement (gains) losses, net 61 122 ( 294 ) Changes in operating assets and liabilities: Accounts receivable 2,210 ( 24,929 ) ( 6,053 ) Unbilled services ( 5,070 ) ( 5,382 ) ( 4,399 ) Prepaid expenses and other current assets, and other assets 1,210 ( 485 ) ( 2,399 ) Forgivable loans 2,678 ( 10,539 ) 10,742 Incentive cash awards payable 8,122 6,618 6,724 Accounts payable, accrued expenses, and other liabilities 4,007 2,253 14,875 Lease liabilities ( 17,763 ) ( 16,524 ) ( 15,515 ) Net cash provided by operating activities 60,072 25,121 75,698 INVESTING ACTIVITIES: Purchases of property and equipment ( 2,366 ) ( 3,813 ) ( 2,623 ) Consideration paid for acquisitions, net ( 577 ) ( 14,352 ) — Net cash used in investing activities ( 2,943 ) ( 18,165 ) ( 2,623 ) FINANCING ACTIVITIES: Issuance of common stock, principally stock options exercises 805 1,411 5,157 Borrowings under revolving line of credit 105,000 126,000 74,000 Repayments under revolving line of credit ( 105,000 ) ( 126,000 ) ( 74,000 ) Payments for debt issuance costs — ( 1,008 ) — Tax withholding payments reimbursed by shares ( 3,063 ) ( 2,145 ) ( 1,528 ) Cash paid for contingent consideration — — ( 2,357 ) Cash dividends paid ( 10,807 ) ( 9,580 ) ( 8,289 ) Repurchase of common stock ( 31,417 ) ( 27,630 ) ( 44,976 ) Net cash used in financing activities ( 44,482 ) ( 38,952 ) ( 51,993 ) Effect of foreign exchange rates on cash and cash equivalents 1,492 ( 2,687 ) ( 629 ) Net increase (decrease) in cash and cash equivalents 14,139 ( 34,683 ) 20,453 Cash and cash equivalents at beginning of period 31,447 66,130 45,677 Cash and cash equivalents at end of period $ 45,586 $ 31,447 $ 66,130 Noncash investing and financing activities: Increase (decrease) in accounts payable and accrued expenses for property and equipment $ ( 91 ) $ ( 268 ) $ 8 Excise tax on share repurchases $ ( 247 ) $ — $ — Right-of-use assets obtained in exchange for lease obligations $ 3,198 $ 2,436 $ 1,751 Restricted common stock issued for contingent consideration $ — $ — $ 2,250 Supplemental cash flow information: Cash paid for taxes $ 14,011 $ 15,646 $ 14,953 Cash paid for interest $ 3,539 $ 1,579 $ 727 Cash paid for amounts included in operating lease liabilities $ 22,272 $ 21,306 $ 20,823 See accompanying notes to the consolidated financial statements. FS-7 Table of Contents CRA INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in thousands, except share data) Common Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders' Equity Shares Issued Amount BALANCE AT JANUARY 2, 2021 7,693,497 $ 503 $ 216,999 $ ( 8,483 ) $ 209,019 Net income — — 41,679 — 41,679 Foreign currency translation adjustment — — — ( 1,467 ) ( 1,467 ) Issuance of restricted common stock for contingent consideration 40,039 2,250 — — 2,250 Exercise of stock options 192,803 5,157 — — 5,157 Share-based compensation expense — 4,086 — — 4,086 Restricted shares vesting 65,242 — — — — Redemption of vested employee restricted shares for tax withholding ( 20,133 ) ( 1,528 ) — — ( 1,528 ) Shares repurchased ( 608,745 ) ( 10,468 ) ( 34,508 ) — ( 44,976 ) Accrued dividends on unvested shares — — ( 97 ) — ( 97 ) Cash dividends paid ($ 1.09 per share) — — ( 8,289 ) — ( 8,289 ) BALANCE AT JANUARY 1, 2022 7,362,703 $ — $ 215,784 $ ( 9,950 ) $ 205,834 Net income — — 43,619 — 43,619 Foreign currency translation adjustment — — — ( 5,031 ) ( 5,031 ) Exercise of stock options 61,645 1,411 — — 1,411 Share-based compensation expense — 4,773 — — 4,773 Restricted shares vesting 66,127 — — — — Redemption of vested employee restricted shares for tax withholding ( 21,057 ) ( 2,145 ) — — ( 2,145 ) Shares repurchased ( 319,534 ) ( 2,296 ) ( 25,334 ) — ( 27,630 ) Accrued dividends on unvested shares — — ( 97 ) — ( 97 ) Cash dividends paid ($ 1.29 per share) — — ( 9,580 ) — ( 9,580 ) BALANCE AT DECEMBER 31, 2022 7,149,884 $ 1,743 $ 224,392 $ ( 14,981 ) $ 211,154 Net income — — 38,481 — 38,481 Foreign currency translation adjustment — — — 2,799 2,799 Exercise of stock options 26,000 805 — — 805 Share-based compensation expense — 4,400 — — 4,400 Restricted shares vesting 83,158 — — — — Redemption of vested employee restricted shares for tax withholding ( 28,619 ) ( 3,063 ) — — ( 3,063 ) Shares repurchased ( 296,158 ) ( 3,885 ) ( 27,532 ) — ( 31,417 ) Accrued excise tax on shares repurchased — — ( 247 ) — ( 247 ) Accrued dividends on unvested shares — — ( 4 ) — ( 4 ) Cash dividends paid ($ 1.50 per share) — — ( 10,807 ) — ( 10,807 ) BALANCE AT DECEMBER 30, 2023 6,934,265 $ — $ 224,283 $ ( 12,182 ) $ 212,101 See accompanying notes to the consolidated financial statements FS-8 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Description of Business CRA International, Inc. ("CRA" or the "Company") is a worldwide leading consulting services firm that applies advanced analytic techniques and in-depth industry knowledge to complex engagements for a broad range of clients. CRA offers services in two broad areas: litigation, regulatory, and financial consulting and management consulting. CRA operates in one business segment. CRA operates its business under its registered trade name, Charles River Associates. Fiscal Year and Quarters CRA's fiscal year end is the Saturday nearest December 31 of each year. CRA's fiscal years periodically contain 53 weeks rather than 52 weeks. Fiscal 2023, fiscal 2022, and fiscal 2021 were 52-week years. CRA's fiscal quarter ends are determined as the last Saturday nearest the respective calendar quarter end. Basis of Presentation The consolidated financial statements include the accounts of CRA International, Inc. and its wholly-owned subsidiaries (collectively the "Company") which require consolidation, after the elimination of intercompany accounts and transactions. Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported results of operations, financial position, or cash flows. Estimates The preparation of financial statements in conformity with GAAP requires management to make significant estimates and judgments that affect the reported amounts of assets and liabilities, as well as the related disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of consolidated revenues and expenses during the reporting period. Estimates in these consolidated financial statements include, but are not limited to, allowances for accounts receivable and unbilled services, revenue recognition on fixed-price contracts, variable consideration to be included in the transaction price of revenue contracts, the useful life of long-lived assets, measurement of operating lease right-of-use ("ROU") assets and liabilities, share-based compensation, valuation of contingent consideration liabilities, valuation of acquired intangible assets, goodwill, accrued and deferred income taxes, valuation allowances on deferred tax assets, accrued incentive compensation, and certain other accrued expenses. These items are monitored and analyzed by CRA for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. CRA bases its estimates on historical experience and various other assumptions that CRA believes to be reasonable under the circumstances. Actual results may differ from those estimates if CRA's assumptions based on past experience or other assumptions do not turn out to be substantially accurate. Cash and Cash Equivalents CRA considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash equivalents consist principally of money market funds with original maturities of three months or less when purchased. Concentrations of Credit Risk CRA holds cash in accounts at various third-party financial institutions. At times, these deposits may exceed federally insured limits. As of December 30, 2023, CRA's cash accounts were concentrated at two financial institutions, which potentially exposes CRA to credit risks. The financial institutions are creditworthy and the Company has not experienced any losses related to such accounts. CRA does not believe that there is significant risk of non-performance by the financial institutions, and its cash on deposit is fully liquid. CRA continually monitors the credit ratings of the institutions. Foreign Currency Translation Asset and liability accounts of CRA's foreign subsidiaries are translated into U.S. Dollars at reporting period-end exchange rates and operating accounts are translated at average exchange rates for each fiscal month. The resulting translation FS-9 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) adjustments are recorded in shareholders' equity as a component of accumulated other comprehensive income (loss). Foreign currency transactions are remeasured at current exchanges rates, with adjustments recorded as foreign currency gains (losses), net, on the consolidated statements of operations. These foreign currency transactions may be realized or unrealized based upon whether the transaction has settled as of the reporting period-end. The effect of transaction gains and losses recorded in income before provision for income taxes amounted to losses of $ 1.4 million for fiscal 2023, gains of $ 1.9 million for fiscal 2022, and losses of $ 0.5 million for fiscal 2021. Revenue Recognition and Allowances for Accounts Receivable and Unbilled Services Revenue is recognized when CRA satisfies a performance obligation by transferring services promised in a contract to a client in an amount that reflects the consideration that CRA expects to receive in exchange for those services. Performance obligations in CRA's contracts represent distinct or separate service streams that CRA provides to clients. If, at the outset of an arrangement, CRA determines that an enforceable contract does not exist, revenues are deferred until all criteria for an enforceable contract are met. CRA derives substantially all of its revenues from the performance of professional services for its clients. The contracts that CRA enters into and operates under specify whether the engagement will be billed on a time-and-materials basis or a fixed-price basis. • Time-and-materials arrangements require the client to pay based on the number of hours worked at contractually agreed-upon hourly rates. Revenues are recognized from these arrangements based on hours incurred and contracted rates based on a right-to-payment for services completed to date. When a time-and-materials arrangement has a "cap" or "limit" amount, revenue is recognized up to the cap or limit amount specified by the client, based on the efforts or hours incurred and expenses incurred. Thereafter, revenue is reserved pending an amendment of the cap or limit. • Fixed-price arrangements require the client to pay a contractually agreed-upon fee in exchange for a pre-established set of professional services. Fees are based on estimates of the costs and timing for completing a performance obligation. Under fixed-price arrangements, revenues are generally recognized using a proportional performance method, which is based on the ratio of costs incurred to the total estimated costs for completing a performance obligation. CRA's fixed-price arrangements generally have a single performance obligation. For arrangements that contain multiple performance obligations, the fixed price is allocated based on the estimated relative standalone selling prices of the promised services underlying each performance obligation. CRA has elected as a practical expedient to not disclose the aggregate amount of the transaction price allocated to unsatisfied performance obligations as of December 30, 2023 and December 31, 2022, as CRA's contracts have an original expected duration of one year or less or revenue has been recognized at the amount for which CRA has the right to invoice for consulting services performed. Reimbursable expenses, including those relating to travel, out-of-pocket expenses, outside consultants and other third-party vendor expenses, are generally included in revenues, and an equivalent amount of reimbursable expenses is included in costs of services in the period in which the expense is incurred. Sales, value-added, and other taxes collected on behalf of third parties are excluded from revenue. Commissions to non-employee experts are expensed when incurred if the related amortization period is expected to be one year or less. Differences between the timing of billing and the recognition of revenue are recognized as either unbilled services or deferred revenues in the accompanying consolidated balance sheets. Revenues recognized for services performed but not yet billed to clients are recorded as unbilled services. Client prepayments and retainers are classified as deferred revenues and recognized over future periods as earned in accordance with the applicable retention agreement. CRA usually issues invoices to its customers on a monthly basis, and payment is usually due upon receipt of the invoice unless contract terms state otherwise. When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. CRA does not assess whether a significant financing component exists if the period between when it performs its obligations under the contract and when the customer pays is one year or less. None of CRA's contracts contained a significant financing component as of December 30, 2023 or December 31, 2022. FS-10 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Contract Balances from Contracts with Customers The timing of revenue recognition, billings, and cash collections results in accounts receivables, unbilled services, and contract liabilities on the consolidated balance sheets. Revenues recognized for services performed but not yet billed to clients are recorded as unbilled services. CRA defines contract assets as assets for which it has recorded revenue because it determines that it is probable that it will earn a performance-based or contingent fee, but is not yet entitled to receive a fee because certain events, such as completion of the measurement period or client approval, must occur. CRA defines contract liabilities as advance payments from or billings to its clients for services that have not yet been performed or earned. When consideration is received, or such consideration is unconditionally due from a customer prior to transferring consulting services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after performance obligations have been satisfied and all revenue recognition criteria have been met. Contract liabilities are included in deferred revenue and other liabilities on the consolidated balance sheets. Variable Consideration Variable consideration to be included in the transaction price is estimated using the expected value method. Variable consideration is included in the transaction price if it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Revenues from CRA's consulting services are recorded at the net transaction price, which includes estimates of variable consideration for which reserves are established. Variable consideration reserves are based on specific price concessions and those expected to be extended to CRA clients estimated by CRA's historical realization rates. Reserves for variable consideration are recorded as a component of the allowances for accounts receivable and unbilled services on the consolidated balance sheets. Actual amounts of consideration ultimately received may differ from CRA's estimates. If actual results in the future vary from its estimates, CRA adjusts these estimates in the period such variances become known. Adjustments to the reserves for variable consideration are included in revenues on the consolidated statement of operations. Reserves for Credit Risk CRA's accounts receivable and unbilled services consist of receivables from a broad range of clients in a variety of industries located throughout the U.S. and in other countries. CRA performs a credit evaluation of its clients to minimize its collectability risk. Periodically, CRA will require advance payment from certain clients. However, CRA does not require collateral or other security. CRA maintains allowances for accounts receivable and unbilled services for estimated losses resulting from clients’ failure to make required payments. CRA estimates these allowances based on historical charge-off rates, adjusted for days of sales outstanding and expected changes to clients’ financial conditions during the anticipated collection period. CRA writes off allowances when management determines the balance is uncollectible and all efforts of collection have been exhausted. Bad debt expense, net of recoveries of previously written off allowances, is recorded as a component of selling, general and administrative expenses on the consolidated statements of operations. Costs of Services Costs of services include the salaries, bonuses, share-based compensation expense, forgivable loan amortization, and benefits of our employee consultants. Costs of services also include out-of-pocket and other third-party vendor expenses, and the salaries of support staff whose time is billed directly to clients, such as librarians, editors, and programmers, as well as the amounts billed to us by our outside consultants for services rendered while completing a project. Costs of services does not include depreciation and amortization. Selling, General and Administrative Expenses Selling, general and administrative expenses include salaries, bonuses, share-based compensation expense, and benefits of our administrative and support staff, fees to non-employee experts for generating new business, office rent, marketing, and other costs. FS-11 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Business Combinations CRA accounts for business acquisitions using the acquisition method of accounting, which requires assets acquired and liabilities assumed to be measured and recorded at their estimated fair values as of the acquisition date, with certain exceptions. Right-of-use assets and lease liabilities are recorded on the date of acquisition in accordance with ASC Topic 842, Leases. In addition, contract assets and contract liabilities are recorded in accordance with ASC 606, as we adopted Accounting Standards Update No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers on the first day of fiscal 2022. All other tangible assets and identifiable intangible assets acquired and liabilities assumed are recorded at their fair value as of the date of acquisition. The purchase price is determined as the fair value of consideration transferred. Goodwill is recognized for the excess of consideration transferred over the estimated fair value of the identifiable net assets acquired. Intangible assets that are separate from goodwill and have determinable useful lives are valued separately. Fair value measurements require extensive use of estimates and assumptions, including estimates of future cash flows to be generated by the acquired assets, discount rates that we believe reflect the risk factors associated with the related cash flows, and estimates of useful lives. The useful lives of identifiable intangible assets acquired in a business acquisition are estimated based on the expected period that we will receive substantially all of the projected future benefits from the intangible asset. Deferred Compensation CRA accounts for performance-based and service-based cash awards using an accrual method where changes in estimates are accounted for prospectively over the remaining service period. To the extent the terms of an award attribute all or a portion of the expected future benefits to a period of service greater than one year, the cost of those benefits is accrued over the employee's or non-employee's requisite service period in a systematic and rational manner. The requisite service period typically ranges from two to seven years starting with the employee's employment date or non-employee's affiliation date. For an employee or non-employee consultant currently affiliated with CRA, the requisite service period generally begins at the start of the award's measurement period. A recipient of such an award is expected to be employed by or affiliated with CRA for the entire measurement period. If the recipient's employment or affiliation with CRA terminates during the measurement period, the amount paid will be determined in accordance with the recipient's specific contract provisions. The terms of award agreements may include the achievement of minimum required financial targets over the award's measurement period. These financial targets may include a measure of revenue generation, profitability, or both. The amount of the liability of the award agreements is estimated based on internally generated financial projections. The process of projecting these financial targets over the measurement period is subjective and requires judgment and estimates. There can be no assurance that the estimates and assumptions used in preparing these projections will prove to be accurate. Leases CRA is a lessee under certain operating leases for office space and equipment. CRA determines whether a contract is a lease at the inception of the contract, based on whether the contract provides CRA the right to control the use of a physically distinct asset or substantially all of the capacity of an asset. At the commencement date, operating lease liabilities and ROU assets are recognized on the consolidated balance sheet. Lease liabilities are based on the present value of lease payments over the lease term, discounted using an incremental borrowing rate specific to the underlying asset. ROU assets are equal to the lease liability, adjusted for payments made to the lessor prior to the lease commencement date and lease incentives received, such as tenant improvement allowances. CRA estimates its incremental borrowing rate for each leased asset based on the interest rate CRA would incur to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. CRA recognizes rent expense for its operating leases on a straight-line basis over the term of the lease. CRA classifies as short-term leases any leases with an initial noncancellable term of twelve months or less that do not include an option to purchase the underlying asset that CRA is reasonably certain to exercise. ROU assets and lease liabilities related to short-term leases are excluded from the consolidated balance sheets. CRA leases office space and equipment. CRA's equipment leases are generally short-term. CRA's office space leases have remaining lease terms between one and approximately eight years , many of which include one or more options to extend the term for periods of up to five years for each option. Certain office space leases contain options to terminate the lease early, FS-12 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) which may include a penalty for exercising the option. Many of the termination options require notice within a specified period, after which the option is no longer available to CRA if not exercised. The extension options and termination options may be exercised at CRA's sole discretion. CRA does not consider in the measurement of ROU assets and lease liabilities an option to extend or terminate a lease if CRA is not reasonably certain to exercise the option. As of December 30, 2023, CRA has not included any options to extend or terminate in its measurement of ROU assets or lease liabilities. Certain of CRA's office space leases impose asset retirement obligations due to office modifications or the periodic redecoration of the premises. These obligations are included in deferred compensation and other non-current liabilities on the consolidated balance sheets and are recorded at a value based on their estimated discounted cash flows. Many of CRA's office space leases include fixed and variable payments. Variable payments relate to real estate taxes, sales or use taxes, insurance, operating expenses, and common area maintenance, which are usually billed at actual amounts incurred proportionate to CRA's rented square feet of the building. Variable payments that do not depend on an index or rate are expensed by CRA as they are incurred and are not included in the measurement of the lease liability. Many of CRA's leases contain both lease and non-lease components. For office space leases, lease and non-lease components are accounted for as a single component. For equipment leases, fixed and variable payments are allocated to each component relative to observable or estimated standalone prices. CRA measures its variable lease costs as the portion of variable payments that are allocated to lease components. Goodwill Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill is tested annually for impairment as of October 15 and if events or changes in circumstances indicate that the carrying value may not be recoverable. CRA assesses goodwill at the reporting unit level. For CRA's fiscal 2023 goodwill impairment analysis, it operated as one reporting unit, which is its consulting services. The annual goodwill impairment test may use a qualitative or quantitative assessment. In performing the qualitative assessment, CRA considers various factors, such as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, changes in management or key personnel, a sustained decrease in share price, and factors specific to the reporting unit. In performing the quantitative assessment, CRA compares the estimated value of its reporting unit to its net book value to identify potential impairment. CRA estimates the fair value of its consulting business reporting unit utilizing its market capitalization plus an appropriate control premium. Market capitalization is determined by multiplying CRA's shares outstanding by the market price of its common stock. CRA determines the control premium utilizing data from publicly available premium studies for the trailing four quarters for public company transactions in its industry group. If the estimated fair value of the reporting unit is less than its net book value, goodwill is impaired. Intangible Assets Intangible assets are comprised of customer relationship intangibles, which are separable from goodwill and have determinable useful lives. CRA's intangible assets are valued separately and amortized over their estimated useful lives using the straight-line method. Property and Equipment Property and equipment are recorded at cost. Depreciation is calculated using the straight-line method based on the estimated useful lives of approximately three years for computer equipment, three to ten years for computer software, and ten years for furniture and fixtures. Amortization of leasehold improvements is calculated using the straight-line method over the shorter of the lease term or the estimated useful life of the leasehold improvements. Expenditures for maintenance and repairs are expensed as incurred. Expenditures for renewals and betterments are capitalized. Debt Issuance Costs The Company records its debt issuance costs related to its revolving credit facility as an asset and amortizes the costs over the term of the credit agreement using the straight-line method. Debt issuance costs in the amount of $ 0.2 million and $ 0.6 million are included in prepaid expenses and other current assets and other assets, respectively, on the consolidated balance sheets as of December 30, 2023. Debt issuance costs in the amount of $ 0.2 million and $ 0.7 million are included in prepaid expenses and other current assets and other assets, respectively, on the consolidated balance sheets as of December 31, 2022. FS-13 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Impairment of Long-Lived Assets CRA reviews the carrying value of its long-lived assets (primarily property and equipment, finite-lived intangible assets, and ROU assets) to assess the recoverability of these assets whenever events or circumstances indicate that impairment may have occurred. Factors CRA considers important that could trigger an impairment review include, among others, the following: • a significant underperformance relative to expected historical or projected future operating results; • a significant decrease in the market price of a long-lived asset (asset group); • a significant change in the manner of CRA's use of the acquired asset or the strategy for CRA's overall business; • a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group); • an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); • a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); • a current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life; and • a significant negative industry or economic trend. If CRA determines that an impairment review is required, CRA would review the expected future undiscounted cash flows to be generated by the assets or asset groups. If CRA determines that the carrying value of long-lived assets or asset groups may not be recoverable, CRA would measure any impairment based on a projected discounted cash flow method using a discount rate determined by CRA to be commensurate with the risk inherent in CRA's current business model. If impairment is indicated through this review, the carrying amount of the assets would be reduced to their estimated fair value. Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurement, establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurement), then priority to quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market (Level 2 measurement), then the lowest priority to unobservable inputs (Level 3 measurement). CRA's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, are carried at cost, which approximates their fair value because of the short-term maturity of these instruments or because their stated interest rates are indicative of market interest rates. A contingent consideration liability paid in February 2021, pertained to estimated future contingent consideration payments related to the acquisition of C1 Consulting, LLC, an independent consulting firm, and its wholly-owned subsidiary C1 Associates (collectively, "C1"). CRA recorded an additional contingent consideration liability of $ 1.1 million during fiscal year 2022 related to the acquisition of bioStrategies Group, Inc. (“bSG”). The fair value measurement of the liabilities were based on significant inputs not observed in the market and thus represented a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the contingent consideration liabilities were CRA's estimate of the payout based on internally generated revenue projections, expected volatility of the revenue projections, and discount rates. The fair value of the contingent consideration had been determined using a Monte Carlo simulation, and was reassessed on a quarterly basis by CRA using additional information as it became available. Changes in the fair value estimate were recorded in costs of services (exclusive of depreciation and amortization) on the consolidated statements of operations. Income Taxes CRA records income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized based on estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. CRA includes in the estimate of deferred tax assets and liabilities an estimate of the realizable benefits from operating loss and tax credit carryforwards. Deferred tax assets and liabilities are FS-14 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. CRA is required to establish a valuation allowance on its deferred tax assets to reflect the likelihood of realization. Significant management judgment is required in determining deferred tax assets and liabilities and any valuation allowance recorded against its net deferred tax assets. The weight of all available evidence is evaluated to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The decision to record a valuation allowance requires varying degrees of judgment based upon the nature of the item giving rise to the deferred tax asset. If, after a valuation allowance is recorded, it is determined that CRA would be able to realize deferred tax assets in the future in excess of their net recorded amount, CRA would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. CRA's effective tax rate may vary from period to period based on changes in estimated taxable income or loss; changes to the valuation allowance; changes to federal, state, or foreign tax laws; future expansion into areas with varying country, state, and local income tax rates; deductibility of certain costs; uncertain tax positions; expenses by jurisdiction; and results of acquisitions or dispositions. The calculation of CRA's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in several different tax jurisdictions. CRA is periodically reviewed by domestic and foreign tax authorities. These reviews include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. CRA accounts for uncertainties in income tax positions in accordance with ASC Topic 740, Income Taxes ("ASC 740"). The number of years with open tax audits varies depending on the tax jurisdiction. The Company has elected to recognize the tax on global intangible low-taxed income ("GILTI") as a period expense in the period the tax is incurred. As such, CRA has included its GILTI provision associated with current-year operations solely within the estimated annual effective tax rate ("EAETR") and has not provided additional GILTI on deferred items. Share-Based Compensation CRA accounts for equity-based compensation using a fair value based recognition method. Under the fair value recognition requirements of ASC Topic 718, Compensation-Stock Compensation ("ASC Topic 718"), share-based compensation cost is estimated at the grant date based on the fair value of the award and is recognized as expense over the requisite service period of the award. For those awards that are deemed probable of vesting, CRA recognizes the estimated fair value as expense over the requisite service period of the award. The amount of share-based compensation expense recognized at any date must at least equal the portion of grant date value of the award that is vested at that date. In accordance with ASC Topic 718, for time-vesting restricted stock units awarded to employees, CRA estimates share-based compensation cost at the grant date based on the fair value of the restricted stock units and awards and recognizes the cost for awards that are probable of vesting over the requisite service period on a straight-line basis. Performance-vesting restricted stock units are expensed using the graded attribution method. The forfeiture rate is based upon historical experience. CRA believes its historical experience is an appropriate indicator of future forfeitures. Common Stock and Equity Equity transactions consist primarily of the repurchase by CRA of its common stock under its share repurchase program and the recognition of compensation expense and issuance of common stock under CRA’s 2006 Equity Incentive Plan. The Company repurchases its common stock under its share repurchase program in open market purchases (including through any Rule 10b5-1 plan adopted by CRA) or in privately negotiated transactions in accordance with applicable insider trading and other securities laws and regulations. During the second fiscal quarter of fiscal 2021, CRA repurchased shares of its common stock through a modified "Dutch auction" self-tender offer, as further described in Note 12. The purchase price of common stock is first charged against available paid-in capital (“PIC”) until PIC is exhausted, after which the purchase price is charged to retained earnings. CRA’s common stock has no par value. All shares repurchased have been retired. FS-15 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Net Income (Loss) Per Share CRA computes basic net income or loss per share utilizing the two-class method, whereby net earnings are allocated to each class of common stock and participating security as if all the net earnings for the period had been distributed. Under the two-class method, basic net income or loss per share is computed by dividing net income or loss allocated to common stock by the weighted-average number of common shares outstanding. CRA's participating securities consist of unvested share-based payment awards that contain a nonforfeitable right to receive dividends. Potentially dilutive shares are excluded from the basic net income or loss per share calculation. CRA computes diluted net income or loss per share utilizing the more dilutive of either the two-class method or the treasury stock method. Under the two-class method, diluted net income or loss per share is computed by dividing net income or loss by the sum of the weighted-average number of shares determined from the basic earnings per share computation and the number of common stock equivalents that would have a dilutive effect. Under the treasury stock method, the weighted average number of common shares outstanding is increased by the potentially dilutive common shares. Potentially dilutive shares are related to our restricted stock, stock options, time-vesting RSUs, and performance-vesting RSUs. To the extent that there is a net loss, CRA assumes all common stock equivalents to be anti-dilutive, and they are excluded from diluted weighted-average shares outstanding. Recent Accounting Standards Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers In October 2021, the FASB issued Accounting Standards Update ("ASU") No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08") . The ASU requires that an acquirer recognize and measure contract assets and liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606") at the acquisition date as if the acquirer had originated the contracts rather than adjust them to fair value. CRA elected to early adopt ASU 2021-08 on the first day of fiscal 2022. The adoption of the new standard had no impact on CRA's financial position, results of operations, cash flows, or disclosures on the date of transition. Recent Accounting Standards Not Yet Adopted Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In November 2023, the FASB issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07") . The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 also requires that a public entity that has a single reportable segment provide all disclosures required by these amendments and all existing segment disclosures in Topic 280. ASU 2023-07 is effective for CRA for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. CRA plans to adopt the amendments during the fourth fiscal quarter of 2024. CRA is in the process of evaluating the impact of adopting ASU 2023-07. Income Taxes (Topic 740): Improvements to Income Tax Disclosures In December 2023, the FASB issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09") . The ASU requires disclosure of specific categories in the rate reconciliation, provide additional information for reconciling items that meet a quantitative threshold, disclose the amount of income taxes paid disaggregated by federal, state, foreign taxes, and individual jurisdiction. ASU 2023-09 also requires income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. ASU 2023-09 is effective for CRA for annual periods beginning after December 15, 2024. CRA plans to adopt the amendments during the annual reporting fiscal year of 2025. CRA is in the process of evaluating the impact of adopting ASU 2023-09. FS-16 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. Business Acquisition On February 28, 2022, CRA acquired substantially all business assets and assumed certain liabilities of Welch Consulting, Ltd. (“Welch Consulting”), a Texas limited partnership. Welch Consulting provided economic, business, and strategic consulting services principally involving labor and employment issues. The acquisition expanded CRA’s business opportunities, expertise, and market presence with the addition of 45 colleagues and offices in Bryan, Texas; Los Angeles, California; and Washington, D.C. A non-employee expert of CRA served as an agent and attorney-in-fact on behalf of Welch Consulting. The non-employee expert did not receive compensation or a portion of the purchase price as part of the transaction. The acquisition has been accounted for as a business combination, and the results of operations have been included in the accompanying consolidated financial statements from the date of acquisition. On the date of acquisition, right-of-use assets and lease liabilities were recorded in accordance with ASC Topic 842, Leases . In addition, contract assets and contract liabilities were recorded in accordance with ASC 606, as CRA adopted ASU 2021-08 on the first day of fiscal 2022. All other tangible assets and identifiable intangible assets acquired and liabilities assumed were recorded at their fair value as of the date of acquisition. Welch Consulting's results of operations have been included in the accompanying consolidated statements of operations from the date of acquisition. The following table is the final allocation of the purchase price to the estimated fair value of assets acquired and liabilities assumed (in thousands): Assets Acquired Current assets: Accounts receivable $ 3,742 Unbilled services 1,382 Prepaid expenses and other current assets 100 Total current assets 5,224 Property and equipment 141 Goodwill 2,409 Intangible assets 4,150 Right-of-use assets 1,210 Other assets 41 Total assets acquired $ 13,175 Liabilities Assumed Current liabilities: Accrued expenses $ 1,245 Deferred revenue and other liabilities 161 Current portion of lease liabilities 549 Total current liabilities 1,955 Non-current portion of lease liabilities 661 Total liabilities assumed $ 2,616 Net assets acquired $ 10,559 For the acquired assets and assumed liabilities, CRA paid $ 10.6 million, net, as of December 30, 2023, the amount of which was based on adjusted estimates of certain net working capital items. In addition, CRA issued $ 7.9 million of forgivable loans and agreed to provide other deferred compensation to key employees and a non-employee expert, which is treated as post-transaction compensation expense over the term of the loan. The intangible assets acquired are comprised of customer relationships, the fair value of which was determined using a multi-period excess earning method. The customer relationships intangible is being amortized over a ten-year life on a straight-line basis, which approximates the expected pattern of economic benefit from this asset. The Company also recorded $ 2.4 million of goodwill, all of which is expected to be deductible for tax purposes. FS-17 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) On November 29, 2022, CRA acquired substantially all of the business assets and assumed certain liabilities of bioStrategies Group, Inc. (“bSG”), a Chicago-based consulting firm focused on developing commercial strategies for healthcare products and technologies. The acquisition expanded CRA’s business opportunities, expertise, and market presence with the addition of 17 colleagues with an office in Chicago, Illinois. The acquisition has been accounted for as a business combination, and the results of operations have been included in the accompanying consolidated financial statements from the date of acquisition. The acquisition of bSG is not significant to our consolidated financial statements for the year ended December 31, 2022. 3. Revenues and Allowances The contracts CRA enters into and operates under specify whether the projects are billed on a time-and-materials or a fixed-price basis. Time-and-materials contracts are typically used for litigation, regulatory, and financial consulting projects while fixed-price contracts are principally used for management consulting projects. In general, project costs are classified in costs of services and are based on the direct salary of CRA's employee consultants on the engagement, plus all direct expenses incurred to complete the project, including any amounts billed to CRA by its non-employee experts. Disaggregation of Revenue The following tables disaggregate CRA's revenue by type of contract and geographic location (in thousands): Year Ended Year Ended Year Ended Type of Contract December 30, 2023 (52 weeks) December 31, 2022 (52 weeks) January 1, 2022 (52 weeks) Consulting services revenues: Fixed-price $ 113,983 $ 110,129 $ 136,276 Time-and-materials 509,993 480,772 429,657 Total $ 623,976 $ 590,901 $ 565,933 Revenues have been attributed to locations based on the location of the legal entity generating the revenues. Year Ended Year Ended Year Ended Geographic Breakdown December 30, 2023 (52 weeks) December 31, 2022 (52 weeks) January 1, 2022 (52 weeks) Consulting services revenues: United States $ 493,923 $ 470,233 $ 451,436 United Kingdom 94,445 89,235 86,191 Other 35,608 31,433 28,306 Total $ 623,976 $ 590,901 $ 565,933 Reserves for Variable Consideration and Credit Risk Revenues from CRA's consulting services are recorded at the net transaction price, which includes estimates of variable consideration for which reserves are established. Variable consideration reserves are based on specific price concessions and those expected to be extended to CRA customers estimated by CRA's historical realization rates. Reserves for variable consideration are recorded as a component of the allowances for accounts receivable and unbilled services on the consolidated balance sheets. Adjustments to the reserves for variable consideration are included in revenues on the consolidated statements of operations. CRA also maintains allowances for accounts receivable and unbilled services for estimated losses resulting from clients’ failure to make required payments. Under ASC 326, CRA estimates allowances based on historical charge-off rates, adjusted for days sales outstanding and expected changes to clients’ financial conditions during the anticipated collection period. Bad debt expense, net of recoveries of previously written off allowances, is recorded as a component of selling, general and administrative expenses on the consolidated statements of operations. FS-18 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) A rollforward of the variable consideration and doubtful accounts reserves for accounts receivable, which includes allowances for doubtful accounts of $ 0.6 million and $ 0.1 million as of December 30, 2023 and December 31, 2022, respectively, is as follows (in thousands): Fiscal Year Fiscal Year 2023 2022 Balance at beginning of fiscal year $ 2,640 $ 3,256 Increases to reserves, net of recoveries 5,510 1,808 Amounts written off and foreign currency translation ( 3,815 ) ( 2,424 ) Balance at end of fiscal year $ 4,335 $ 2,640 A rollforward of the variable consideration and doubtful accounts reserves for unbilled services is as follows (in thousands): Fiscal Year Fiscal Year 2023 2022 Balance at beginning of fiscal year $ 1,120 $ 1,364 Increases to reserves, net of recoveries 7,966 9,176 Amounts written off and foreign currency translation ( 7,457 ) ( 9,420 ) Balance at end of fiscal year $ 1,629 $ 1,120 The following table presents CRA's bad debt expense, net of recoveries of previously written off allowances (in thousands): Year Ended Year Ended Year Ended December 30, 2023 (52 weeks) December 31, 2022 (52 weeks) January 1, 2022 (52 weeks) Bad debt expense, net $ 533 $ ( 345 ) $ 27 Reimbursable Expenses Revenues also include reimbursements for costs incurred by CRA in fulfilling its performance obligations, including travel and other out-of-pocket expenses, fees for outside consultants, and other reimbursable expenses. CRA recovers substantially all of these costs. The following expenses are subject to reimbursement (in thousands): Year Ended Year Ended Year Ended December 30, 2023 (52 weeks) December 31, 2022 (52 weeks) January 1, 2022 (52 weeks) Reimbursable expenses $ 65,277 $ 63,318 $ 64,532 Contract Balances from Contracts with Customers CRA defines contract assets as assets for which it has recorded revenue because it determines that it is probable that it will earn a performance-based or contingent fee, but is not yet entitled to receive a fee because certain events, such as completion of the measurement period or client approval, must occur. The contract assets balance was immaterial as of December 30, 2023 and December 31, 2022. When consideration is received, or such consideration is unconditionally due from a customer prior to transferring consulting services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after performance obligations have been satisfied and all revenue recognition criteria have been met. The following table presents the closing balances of CRA's contract liabilities (in thousands): FS-19 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 30, 2023 December 31, 2022 January 1, 2022 Contract liabilities $ 6,037 $ 6,977 $ 8,811 CRA recognized the following revenue that was included in the contract liabilities balance as of the opening of the respective period or for performance obligations satisfied in previous periods (in thousands): Year Ended Year Ended Year Ended December 30, 2023 (52 weeks) December 31, 2022 (52 weeks) January 1, 2022 (52 weeks) Amounts included in contract liabilities at the beginning of the fiscal year $ 6,700 $ 8,325 $ 5,185 Performance obligations satisfied in previous fiscal years $ 2,912 $ 2,207 $ 2,827 4. Forgivable Loans In order to attract and retain highly skilled professionals, CRA may issue forgivable loans to employees and non-employee experts, certain of which may be denominated in local currencies. A portion of these loans is collateralized. The forgivable loans have terms that are generally between two and six years with interest rates currently ranging up to 5.00 %. The principal amount of forgivable loans and accrued interest is forgiven by CRA over the term of the loans, so long as the employee or non-employee expert continues employment or affiliation with CRA and complies with certain contractual requirements. During fiscal years 2023, 2022 and 2021 there were no balances due under these loans for which the full principal and interest were not forgiven or not collected upon termination of employment or affiliation with CRA. The forgiveness of the principal amount of the loans is recorded as compensation over the service period, which is consistent with the term of the loans. The following table presents forgivable loan activity for the respective periods (in thousands): Fiscal Year Fiscal Year 2023 2022 Beginning balance $ 56,456 $ 48,591 Advances 23,342 34,984 Repayments ( 1,816 ) ( 25 ) Reclassifications from accrued expenses or to other assets (1) — ( 2,192 ) Amortization ( 24,198 ) ( 24,403 ) Effects of foreign currency translation 157 ( 499 ) Ending balance $ 53,941 $ 56,456 Current portion of forgivable loans $ 8,759 $ 9,666 Non-current portion of forgivable loans $ 45,182 $ 46,790 _______________________________ (1) Relates to the reclassification of performance awards previously recorded as accrued expenses or forgivable loans that have been reclassified to other receivables. 5. Leases The components of CRA's lease expenses, which are included in the consolidated statements of operations, are as follows (in thousands): FS-20 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Year Ended Year Ended Year Ended December 30, 2023 (52 weeks) December 31, 2022 (52 weeks) January 1, 2022 (52 weeks) Operating lease cost $ 18,783 $ 18,494 $ 18,293 Short-term lease cost 371 285 442 Variable lease cost 6,960 5,986 5,273 Total lease cost $ 26,114 $ 24,765 $ 24,008 The following table presents summary information for CRA's lease terms and discount rates for its operating leases: December 30, 2023 December 31, 2022 January 1, 2022 Weighted average remaining lease term—operating leases 5.8 years 6.7 years 7.7 years Weighted average discount rate—operating leases 3.6 % 3.6 % 3.6 % At December 30, 2023, CRA had the following maturities of lease liabilities related to office space, all of which are under non-cancellable operating leases (in thousands): Fiscal Year Operating Lease Commitments 2024 $ 19,865 2025 22,049 2026 21,083 2027 21,184 2028 15,237 Thereafter 22,372 Total lease payments 121,790 Less: imputed interest ( 13,035 ) Total $ 108,755 Certain of our operating leases have terms that impose asset retirement obligations due to office modifications or the periodic redecoration of the premises, which are included in other liabilities on our consolidated balance sheets. As of December 30, 2023 and December 31, 2022, these redecoration and asset retirement obligations were approximately $ 2.2 million and $ 1.9 million, respectively. As of December 30, 2023, CRA had no additional operating leases that had not yet commenced. 6. Goodwill and Intangible Assets The changes in the carrying amount of goodwill for fiscal 2023 and fiscal 2022 are as follows (in thousands): Fiscal Year Fiscal Year 2023 2022 Goodwill $ 164,815 $ 160,829 Accumulated goodwill impairment ( 71,893 ) ( 71,893 ) Goodwill, net at beginning of fiscal year 92,922 88,936 Additions due to acquisitions 415 5,361 Foreign currency translation adjustment 652 ( 1,375 ) Goodwill, net at end of fiscal year $ 93,989 $ 92,922 Goodwill, net at December 30, 2023, is comprised of goodwill of $ 165.9 million and accumulated impairment of $ 71.9 million. There were no impairment losses related to goodwill during fiscal 2023, fiscal 2022, or fiscal 2021. FS-21 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Intangible assets that are separable from goodwill and have determinable useful lives are valued separately and amortized using the straight-line method over their expected useful lives. The components of acquired identifiable intangible assets are as follows (in thousands): December 30, 2023 December 31, 2022 Useful Life (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships 10 13,800 ( 6,604 ) 7,196 13,800 ( 5,212 ) 8,588 There were no impairment losses related to intangible assets during fiscal 2023, fiscal 2022, or fiscal 2021. As a result of the Welch Consulting acquisition, CRA recognized $ 4.2 million of intangible assets related to customer relationships in the first quarter of fiscal 2022. As a result of the bSG acquisition, CRA recognized $ 1.4 million of intangible assets related to customer relationships in the fourth quarter of fiscal 2022. Amortization expense related to intangible assets was $ 1.4 million, $ 1.2 million, and $ 0.9 million for fiscal 2023, fiscal 2022, and fiscal 2021, respectively. Amortization of intangible assets held at December 30, 2023 for the next five fiscal years and thereafter is expected to be as follows (in thousands): Fiscal Year Amortization Expense 2024 $ 1,380 2025 1,380 2026 1,380 2027 624 2028 558 Thereafter 1,874 $ 7,196 7. Property and Equipment Property and equipment consist of the following (in thousands): December 30, 2023 December 31, 2022 Computer, office equipment, and software $ 31,261 $ 30,268 Leasehold improvements 61,652 61,220 Furniture 16,103 15,868 Total cost 109,016 107,356 Accumulated depreciation and amortization ( 70,840 ) ( 61,774 ) Total property and equipment, net $ 38,176 $ 45,582 Depreciation expense was $ 10.0 million, $ 10.8 million, and $ 11.8 million in fiscal 2023, fiscal 2022, and fiscal 2021, respectively. Long-lived assets by geographic location are as follows (in thousands): Geographic Breakdown December 30, 2023 December 31, 2022 Long-lived assets (property and equipment, net): United States $ 31,798 $ 38,495 United Kingdom 4,646 4,943 Other 1,732 2,144 Total long-lived assets (property and equipment, net) $ 38,176 $ 45,582 FS-22 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8. Accrued Expenses Accrued expenses consist of the following (in thousands): December 30, 2023 December 31, 2022 Compensation and related expenses $ 143,647 $ 138,728 Performance awards 16,556 9,359 Direct project accruals 1,704 1,783 Other 9,133 5,994 Total accrued expenses $ 171,040 $ 155,864 As of December 30, 2023 and December 31, 2022, approximately $ 121.2 million and $ 116.1 million, respectively, of accrued bonuses for fiscal 2023 and fiscal 2022 were included above in "Compensation and related expenses". 9. Income Taxes The components of income before provision for income taxes are as follows (in thousands): Year Ended Year Ended Year Ended December 30, 2023 (52 weeks) December 31, 2022 (52 weeks) January 1, 2022 (52 weeks) Income before provision for income taxes: U.S. $ 41,238 $ 45,387 $ 43,511 Foreign 11,050 13,413 10,764 Total $ 52,288 $ 58,800 $ 54,275 The provision (benefit) for income taxes consists of the following (in thousands): Year Ended Year Ended Year Ended December 30, 2023 (52 weeks) December 31, 2022 (52 weeks) January 1, 2022 (52 weeks) Currently payable: Federal $ 11,544 $ 8,805 $ 7,072 Foreign 2,796 2,956 2,517 State 4,101 3,231 2,561 Total current expense 18,441 14,992 12,150 Deferred: Federal ( 2,963 ) ( 21 ) ( 92 ) Foreign ( 1,041 ) 114 230 State ( 630 ) 96 308 Total deferred expense (benefit) ( 4,634 ) 189 446 Total tax expense $ 13,807 $ 15,181 $ 12,596 FS-23 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) A reconciliation of CRA's tax rates with the federal statutory rate is as follows: Fiscal Year Fiscal Year Fiscal Year 2023 2022 2021 Federal statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal income tax benefit 5.0 5.2 5.3 Share-based compensation ( 1.1 ) ( 2.4 ) ( 5.0 ) Meals & Entertainment Expense 0.9 0.3 0.1 Executive Compensation 1.7 1.6 1.3 Valuation Allowance ( 1.5 ) 0.7 0.6 Other 0.4 ( 0.6 ) ( 0.1 ) Annual effective tax rate 26.4 % 25.8 % 23.2 % The components of CRA's deferred tax assets and liabilities are as follows (in thousands): December 30, 2023 December 31, 2022 Deferred tax assets: Accrued compensation and related expense $ 18,211 $ 15,432 Allowance for doubtful accounts 2,100 1,263 Net operating loss carryforwards 883 560 Lease liabilities 27,791 31,552 Foreign exchange and other 19 73 Total gross deferred tax assets 49,004 48,880 Less: valuation allowance ( 6 ) ( 749 ) Total deferred tax assets, net of valuation allowance 48,998 48,131 Deferred tax liabilities: Goodwill and other intangible asset amortization 5,599 4,749 Right-of-Use assets 22,472 25,376 Property and equipment 6,761 8,397 Prepaids and other 1,343 1,399 Total deferred tax liabilities 36,175 39,921 Net deferred tax assets $ 12,823 $ 8,210 At December 30, 2023, CRA had U.S. local and foreign net operating losses of $ 2.6 million, an increase of $ 0.3 million from the prior fiscal year-end, with lives ranging from 20 years to indefinite. The change in the total valuation allowance for the current fiscal year was a decrease of approximately $ 0.7 million. The change in assessment was prompted by the enactment of new legislation in a foreign jurisdiction, and as a result, the foreign entity is currently profitable and is expected to maintain profitability in future years. The release of the valuation allowance was comprised primarily of the foreign net operating loss carryforwards previously noted which are forecasted to be utilized over approximately a forty-year period. The aggregate changes in the balances of gross unrecognized tax benefits were as follows (in thousands): Fiscal Year Fiscal Year 2023 2022 Balance at beginning of period $ 35 $ 41 Reductions as a result of a lapse of the applicable statutes of limitations ( 35 ) ( 6 ) Balance at end of the period $ — $ 35 CRA files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. CRA adjusts its unrecognizable tax benefits and the associated interest in light of changing facts and circumstances. A number of years may FS-24 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, CRA believes that its unrecognized tax benefits reflect the most likely outcome. The number of years with open tax audits varies depending on the tax jurisdiction. CRA's major taxing jurisdiction is the United States where CRA is no longer subject to U.S. federal examinations by the Internal Revenue Service for years before fiscal 2020. Within the significant states where CRA is subject to income tax, CRA is no longer subject to examinations by state taxing authorities before fiscal 2019. CRA's United Kingdom ("U.K.") subsidiary's corporate tax returns are no longer subject to examination by His Majesty's Revenue and Customs for years before fiscal 2022. In fiscal 2020, as a result of both a qualitative and quantitative analysis, certain amounts of previously taxed and untaxed post fiscal 2018 U.K. earnings were no longer considered permanently reinvested. Deferred taxes that are a consequence of foreign exchange translation resulting from earnings that are no longer considered permanently reinvested are recorded as a component of foreign currency translation adjustments on the consolidated statements of comprehensive income. In fiscal 2023, CRA's U.S. parent entity received approximately $ 10.2 million in cash dividends from CRA's U.K. subsidiary. These dividends were distributed out of a mix of both previously taxed and untaxed earnings, the latter of which qualified for a full dividends-received-deduction. The foreign exchange translation on the distribution was approximately $ 0.1 million and the tax impact, which was immaterial, was recorded as a component of other comprehensive income. Deferred income taxes or foreign withholding taxes, estimated to be $ 0.5 million, have not been recorded for other jurisdictions as those earnings are considered to be permanently reinvested. 10. Share-Based Compensation CRA recorded approximately $ 4.4 million, $ 4.8 million, and $ 4.1 million of compensation expense for fiscal 2023, fiscal 2022, and fiscal 2021, respectively, for share-based awards consisting of stock options, shares of restricted stock, time-vesting restricted stock units, and performance-vesting restricted stock units issued to employees and directors, based on their respective estimated grant date fair values. Performance-vesting restricted stock units are expensed using the graded attribution method. Share-based Compensation Plans. As of December 30, 2023, CRA's active equity-based compensation plans consist of its Amended and Restated 2006 Equity Incentive Plan, as amended (the "2006 Equity Plan"), and its 1998 Employee Stock Purchase Plan (the "1998 ESPP"), a tax-qualified plan under Section 423 of the Internal Revenue Code. CRA has a long-term incentive program, or "LTIP," which is used as a framework for grants made under the 2006 Equity Plan to its senior corporate leaders, practice leaders and key revenue generators. Under the LTIP, participants have received a mixture of stock options, time-vesting restricted stock units, and performance-vesting restricted stock units. CRA's Cash Incentive Plan facilitates grants to LTIP participants of service-based and performance-based cash awards as a component of the LTIP. The LTIP is designed to reward CRA's senior corporate leaders, practice leaders and key revenue generators and provide them with the opportunity to share in the long-term growth of CRA. 2006 Equity Plan: Maximum and Available Shares. The 2006 Equity Plan authorizes the grant of a variety of incentive and performance awards to CRA's directors, employees and non-employee experts, including stock options, shares of restricted stock, restricted stock units, and other equity awards. The shares available for grant under the 2006 Equity Plan as of December 30, 2023 was 661,327 . FS-25 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Stock Options. A summary of option activity during fiscal 2023 from the 2006 Equity Plan is as follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2022 71,200 $ 40.60 $ 5,826 Fiscal 2023: Granted — $ — Exercised ( 26,000 ) $ 30.96 $ 1,541 Expired — $ — Forfeited — $ — $ — Outstanding at December 30, 2023 45,200 $ 46.15 4.45 $ 2,382 Option exercisable at December 30, 2023 45,200 $ 46.15 4.45 $ 2,382 Vested or expected to vest at December 30, 2023 45,200 $ 46.15 4.45 $ 2,382 There were no stock options granted in fiscal 2023, fiscal 2022, and fiscal 2021 . CRA determines the weighted average fair market value for stock options granted using the Black-Scholes option-pricing model. Generally, the risk-free interest rate is based on U.S. Treasury interest rates with corresponding terms consistent with the expected life of the stock options. Expected volatility and expected life are based on CRA's historical experience. Expected dividend yield is determined based on CRA's annualized dividend rate per share, as a percentage of average market price of the common stock, on each dividend payment date. The forfeiture rate is based upon historical experience. CRA believes its historical experience is an appropriate indicator of future forfeitures. The aggregate intrinsic value of stock options exercised in fiscal 2023, fiscal 2022, and fiscal 2021 was approximately $ 1.5 million, $ 4.9 million, and $ 11.2 million, respectively. There were no stock options that vested during fiscal 2023. The total fair value of stock options that vested during fiscal 2022, and fiscal 2021 was $ 0.1 million, and $ 0.2 million, respectively. As of December 30, 2023, there was no unrecognized compensation cost, net of expected forfeitures, related to non-vested stock options granted. Options granted during or prior to fiscal 2016 expire on the seventh anniversary of the date of grant. Options granted during or after fiscal 2017 expire on the tenth anniversary of the date of grant. Restricted Stock. CRA grants shares of restricted stock, which are subject to the execution of a restricted stock agreement, under its 2006 Equity Incentive Plan. Generally, shares of restricted stock vest in four equal annual installments beginning on the first anniversary of the date of grant. Total unrecognized compensation cost, net of expected forfeitures, related to shares of restricted stock as of December 30, 2023 was $ 1.4 million, which is expected to be recognized over a weighted-average period of 2.5 years. The forfeiture rate of 0.9 % used for shares of restricted stock was based upon historical experience. CRA believes its historical experience is an appropriate indicator of future forfeitures. The following table provides a roll-forward of the shares of restricted stock under the 2006 Equity Incentive Plan over fiscal 2023: Shares of Restricted Stock Number of Shares Weighted-Average Grant Date Fair Value Non-vested at December 31, 2022 26,909 $ 72.60 Granted 6,930 $ 100.95 Vested ( 11,283 ) $ 62.85 Forfeited — $ — Non-vested at December 30, 2023 22,556 $ 86.18 FS-26 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The total fair value of shares of restricted stock that vested during fiscal 2023, fiscal 2022, and fiscal 2021 was $ 0.7 million, $ 0.6 million, and $ 0.5 million, respectively. Time-Vesting RSUs. CRA grants time-vesting restricted stock units, which are subject to the execution of a restricted stock unit agreement, under its 2006 Equity Incentive Plan. Generally, time-vesting restricted stock units vest in four or five equal annual installments beginning on the first anniversary of the date of grant. Total unrecognized compensation cost, net of expected forfeitures, related to time-vesting restricted stock units as of December 30, 2023 was $ 3.3 million, which is expected to be recognized over a weighted-average period of 2.6 years. The forfeiture rate of 0.9 % used for time-vesting restricted stock units was based upon historical experience. CRA believes its historical experience is an appropriate indicator of future forfeitures. The following table provides a roll-forward of the time-vesting restricted stock units under the 2006 Equity Incentive Plan over fiscal 2023: Time-Vesting Restricted Stock Units Number of Units Weighted-Average Grant Date Fair Value Non-vested at December 31, 2022 74,056 $ 62.06 Granted 16,243 $ 110.38 Vested ( 27,917 ) $ 57.08 Forfeited ( 1,491 ) $ 89.94 Non-vested at December 30, 2023 60,891 $ 76.55 The total fair value of time-vesting restricted stock units that vested during fiscal 2023, fiscal 2022, and fiscal 2021 was $ 1.6 million, $ 1.4 million, and $ 1.3 million, respectively. Performance-Vesting RSUs. CRA grants performance-vesting restricted stock units ("PRSUs"), which are subject to the execution of a restricted stock unit agreement, under its 2006 Equity Incentive Plan. Generally, achievement of performance measures for PRSUs are based on a two-year performance period, after which the units determined based on this achievement will vest three-fourths in the first year following the performance period and one-fourth on the fourth anniversary of the date of grant. Beginning with the 2022 grant, fifty percent will vest in the first year following the performance period and one-fourth on the fourth and fifth anniversaries of the date of the grant. The number of units determined based on the achievement of a PRSUs performance measures generally ranges from 50 % to 150 % of the PRSUs' target number of units. For PRSUs awarded to employees, CRA estimates share-based compensation cost at the grant date based on the fair value of the award and recognizes the cost over the requisite service period using the graded attribution method. The following table provides a roll-forward of the performance-vesting restricted stock units under the 2006 Equity Incentive Plan over fiscal 2023. For purposes of this table, granted PRSUs are counted based on the maximum number of units that could vest upon achievement of the PRSUs' performance conditions which equaled 150 % of the PRSU's target number of units for the 2022 grants and 125 % of the PRSUs' target number of units for all grants issued prior to 2022. Performance-Vesting Restricted Stock Units Number of Units Weighted-Average Grant Date Fair Value Non-vested at December 31, 2022 95,046 $ 66.76 Granted 22,631 $ 106.38 Vested ( 43,958 ) $ 57.15 Forfeited ( 2,381 ) $ 59.83 Non-vested at December 30, 2023 71,338 $ 85.48 FS-27 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1998 ESPP. In fiscal 1998, CRA adopted the 1998 ESPP, a tax-qualified plan under Section 423 of the Internal Revenue Code. The 1998 ESPP authorizes the issuance of up to an aggregate of 243,000 shares of common stock to participating employees at a purchase price equal to 85 % of fair market value on either the first or the last day of the one-year offering period under the plan. In fiscal 2023, fiscal 2022, and fiscal 2021, there were no offering periods under this plan and no shares were issued. As of December 30, 2023, there were 211,777 shares available for grant under the 1998 ESPP. 11. Net Income Per Share CRA calculates basic earnings per share using the two-class method. CRA calculates diluted earnings per share using the more dilutive of either the two-class method or treasury stock method. The two-class method was more dilutive for fiscal 2023, fiscal 2022, and fiscal 2021. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all the net earnings for the period had been distributed. CRA's participating securities consist of unvested share-based payment awards that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders Net earnings allocable to these participating securities were not material for fiscal 2023, fiscal 2022, and fiscal 2021. The following table presents the calculation of basic and diluted net income per share (in thousands, except per share data): Year Ended Year Ended Year Ended December 30, 2023 December 31, 2022 January 1, 2022 Numerator: Net income — basic $ 38,481 $ 43,619 $ 41,679 Less: net income attributable to participating shares 136 167 175 Net income — diluted $ 38,345 $ 43,452 $ 41,504 Denominator: Weighted average shares outstanding — basic 7,008 7,218 7,423 Effect of dilutive stock options and restricted stock units 110 137 198 Weighted average shares outstanding — diluted 7,118 7,355 7,621 Net income per share: Basic $ 5.48 $ 6.02 $ 5.59 Diluted $ 5.39 $ 5.91 $ 5.45 Certain share-based awards were anti-dilutive because their exercise price exceeded the average market price over the respective period. The following table presents the anti-dilutive share-based awards that were excluded from the calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding (in thousands): Year Ended Year Ended Year Ended December 30, 2023 December 31, 2022 January 1, 2022 Anti-dilutive share-based awards excluded 7 — 3 12. Self-Tender Offer On March 8, 2021, CRA commenced a modified "Dutch auction" self-tender offer to purchase up to $ 25.0 million in value of shares of its common stock at a price of not less than $ 66.25 per share nor greater than $ 76.00 per share. The self-tender offer expired on April 5, 2021. On April 8, 2021, CRA paid $ 25.3 million, including transaction costs, to repurchase 337,837 shares at a purchase price of $ 74.00 per share. The purchase price and transaction costs were funded from the revolving credit facility and cash on hand. The repurchased shares were retired. FS-28 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 13. Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurement), then priority to quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market (Level 2 measurement), then the lowest priority to unobservable inputs (Level 3 measurement). The following tables show CRA's financial instruments recorded in the consolidated financial statements at fair value on a recurring basis (in thousands): December 30, 2023 Level 1 Level 2 Level 3 Assets: Money market mutual funds $ — $ — $ — Total Assets $ — $ — $ — Liabilities: Contingent consideration liability $ — $ — $ 190 Total Liabilities $ — $ — $ 190 December 31, 2022 Level 1 Level 2 Level 3 Assets: Money market mutual funds $ — $ — $ — Total Assets $ — $ — $ — Liabilities: Contingent consideration liability $ — $ — $ 1,056 Total Liabilities $ — $ — $ 1,056 The contingent consideration liabilities in the table above are for estimated future contingent consideration payments related to the acquisition of bSG. The fair value measurement of these liabilities is based on significant inputs not observed in the market and thus represent a Level 3 measurement. The significant unobservable inputs used in the fair value measurements of these contingent consideration liabilities are CRA's measures of the estimated payouts based on internally generated revenue projections, expected volatility of the revenue projections, and discount rates. The fair value of the contingent consideration was determined using a Monte Carlo simulation. The fair value of these contingent consideration liabilities are reassessed on a quarterly basis by CRA using additional information as it becomes available, and any change in the fair value estimates are recorded in costs of services (exclusive of depreciation and amortization) on the consolidated statements of operations. In the prior fiscal year, CRA recorded a contingent consideration liability of $ 1.1 million, which pertained to estimated future contingent consideration payments related to the acquisition of bSG. The following table summarizes the changes in the contingent consideration liability (in thousands): Fiscal Year Fiscal Year 2023 2022 Beginning balance $ 1,056 $ — Acquisition-related contingent consideration — 1,056 Remeasurement of acquisition-related contingent consideration ( 934 ) — Accretion 68 — Ending balance $ 190 $ 1,056 FS-29 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 14. Credit Agreement On August 19, 2022, CRA refinanced its revolving credit facility by entering into a Credit Agreement (the "Credit Agreement") with Bank of America, N.A., as swingline lender, a letter of credit issuing bank and administrative agent, and with Citizens Bank, N.A., as a letter of credit issuing bank. The Credit Agreement provides CRA with a $ 250.0 million revolving credit facility, which may be decreased at CRA's option to $ 200.0 million during the period from July 16 in a year through January 15 in the next year. Additionally, for the period from January 16 to July 15 of each calendar year, CRA may elect to not increase the revolving credit facility to $ 250.0 million. The revolving credit facility includes a $ 25.0 million sublimit for the issuance of letters of credit. CRA may use the proceeds of the revolving credit loans under the Credit Agreement for general corporate purposes and may repay any borrowings under the revolving credit facility at any time, but any borrowings must be repaid no later than August 19, 2027. Borrowings under the revolving credit facility bear interest at a rate per annum equal to one of the following rates, at CRA's election, plus an applicable margin as described below: (i) in the case of borrowings in U.S. dollars by the Company, the Base Rate (as defined in the Credit Agreement), (ii) in the case of borrowings in U.S. dollars, a rate based on Term SOFR (as defined in the Credit Agreement) for the applicable interest period, (iii) in the case of borrowings in Euros, EURIBOR (as defined in the Credit Agreement) for the applicable interest period, (iv) in the case of borrowings in Pounds Sterling, a daily rate based on SONIA (as defined in the Credit Agreement), (v) in the case of borrowings in Canadian Dollars, CDOR (as defined in the Credit Agreement) for the applicable interest period, (vi) in the case of borrowings in Swiss Francs, a daily rate based on SARON (as defined in the Credit Agreement), or (vii) in the case of borrowings in any other Alternate Currency (as defined in the Credit Agreement), the relevant daily or term rate determined as provided in the Credit Agreement. The applicable margin on borrowings based on the Base Rate varies within a range of 0.25 % to 1.00 % depending on CRA's consolidated net leverage ratio, and the applicable margin on borrowings based on any of the other rates described above varies within a range of 1.25 % to 2.00 % depending on CRA's consolidated net leverage ratio. CRA is required to pay a fee on the amount available to be drawn under any letter of credit issued under the revolving credit facility at a rate per annum that varies between 1.25 % and 2.00 % depending on CRA's consolidated net leverage ratio. In addition, CRA is required to pay a fee on the unused portion of the revolving credit facility at a rate per annum that varies between 0.175 % and 0.250 % depending on CRA's consolidated net leverage ratio. Under the Credit Agreement, CRA must comply with various financial and non-financial covenants. The primary financial covenants consist of a maximum consolidated net leverage ratio of 3.0 to 1 and a minimum consolidated interest coverage ratio of 2.5 to 1. The primary non-financial covenants include, but are not limited to, restrictions on CRA's ability to incur future indebtedness, engage in acquisitions or dispositions, pay dividends or repurchase capital stock, and enter into business combinations. Any indebtedness outstanding under the revolving credit facility may become immediately due upon the occurrence of stated events of default, including CRA's failure to pay principal, interest or fees, or upon the breach of any covenant. As of December 30, 2023, CRA was in compliance with the covenants of the Credit Agreement. There were no borrowings outstanding under the Credit Agreement as of December 30, 2023 or December 31, 2022. As of December 30, 2023, the amount available under the revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $ 4.5 million. 15. Employee Benefit Plans CRA maintains a qualified defined contribution 401(k) plan, which covers substantially all of its U.S. employees. Under the plan, participants are entitled to make pre-tax and/or Roth post-tax contributions up to the annual maximums established by the Internal Revenue Service. Under the plan, participants are also entitled to make after-tax contributions up to $ 20,000 per calendar year. CRA matches a certain percentage of participant contributions pursuant to the terms of the plan, which contributions are limited to a percentage of the participant’s eligible compensation. CRA made contributions related to the plan of $ 4.5 million, $ 4.0 million and $ 3.6 million for fiscal 2023, fiscal 2022, and fiscal 2021, respectively. CRA also maintains several defined contribution pension plans for its employees in the U.K. and other foreign countries. CRA made contributions related to these plans of $ 1.5 million, $ 1.3 million and $ 1.4 million for fiscal 2023, fiscal 2022, and fiscal 2021, respectively. 16. Related-Party Transactions CRA made payments to shareholders of CRA who performed consulting services exclusively for CRA in the amounts of $ 7.2 million, $ 8.8 million, and $ 8.0 million in fiscal 2023, fiscal 2022, and fiscal 2021, respectively. These payments to FS-30 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) exclusive non-employee experts included payments for consulting services performed for CRA's clients in the ordinary course of business. 17. Commitments and Contingencies As described in Note 14, CRA is party to standby letters of credit with its bank in support of the minimum future lease payments under certain operating leases for office space. CRA is subject to legal actions arising in the ordinary course of business. In management's opinion, based on current knowledge, CRA believes it has adequate legal defenses or insurance coverage, or both, with respect to the eventuality of such actions. CRA does not believe any settlement or judgment relating to any pending legal action would materially affect its financial position or results of operations. However, the outcome of such legal actions is inherently unpredictable and subject to inherent uncertainties. 18. Subsequent Events On February 29, 2024, CRA announced that its Board of Directors authorized a $ 35.0 million expansion to its existing share repurchase program. On February 29, 2024, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.42 per common share, payable on March 22, 2024 to shareholders of record as of March 12, 2024. FS-31